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An asset purchase agreement is an agreement for the sale and purchase of business assets between the Purchasor, the Company and the Seller.
TABLE OF CONTENTS Pages 1 - INTERPRETATION 5 1.1 Definitions 5 1.2 Extended Meanings 8 1.3 Interpretation Not Affected by Headings 8 1.4 Applicable Law 8 1.5 Funds 8 1.6 Financial Documents 8 1.7 Invalidity 9 1.8 Business Day 9 1.9 Preamble 9 2 - PURCHASED ASSETS 9 2.1 Purchased Assets 10 2.2 Excluded Assets 11 2.3 Leases and Retention of Ownership Agreements 11 2.4 Removal of Purchased Assets 11 2.5 Forward Commitments 11 2.6 Assets Used in the Business 11 3 - PURCHASE AND SALE 11 3.1 Purchase Price 11 3.2 Default 12 3.3 Balance of Price 12 3.4 Allocation of the Purchase Price 12 3.5 No Assumption of Liabilities 12 3.6 Payment of Taxes 13 3.7 Adjustments 13 3.8 Net Worth Adjustment 13 3.9 Disagreement Regarding Adjustment of Purchase Price 13 3.10 Escrow of Purchase Price 13 4 - CLOSING AND CONDITIONS PRECEDENT TO THE SALE 14 4.1 Closing Date 14 4.2 Conditions Precedent to Closing in Favor of the Purchaser 14 4.2.1 Corporate Authorization 14 4.2.2 Statements 14 4.2.3 Truth of Representations and Warranties 14 4.2.4 Compliance with Terms and Conditions 14 4.2.5 Governmental Approvals 15 4.2.6 Approval of Purchaser’s Counsel 15 4.2.7 Prohibited Actions 15 4.2.8 Delivery of Documents and Title Deeds 15 4.2.9 Legal Opinion of Seller’s Counsel 15 4.2.10 Non-Competition Agreements 15 Asset Purchase Agreement Page 1 of 37 4.2.11 Residence 15 4.2.12 Bulk Sale Affidavit 16 4.2.13 Tax Election Form 16 4.2.14 Powers of Attorney 16 4.2.15 Consents 16 4.2.16 Due Diligence 16 4.2.17 No Substantial Damage or Adverse Change 16 4.2.18 No Adverse Legislation 16 4.2.19 Delivery of Documents 16 4.3 Conditions Precedent to Closing in Favor of the Seller 16 4.3.1 Letter of Credit 17 4.3.2 Truth of Representations and Warranties 17 4.3.3 Compliance with Terms and Conditions 17 4.3.4 Legal Opinion of Purchaser’s Counsel 17 4.4 Risk of Loss 17 4.5 Notification 18 5 - REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE PURCHASER 18 5.1 Representations and Warranties of Seller 18 5.1.1 Due Incorporation and Qualification to Carry on Business 18 5.1.2 Binding Nature 18 5.1.3 Title of Assets 18 5.1.4 Options, Commitments 19 5.1.5 No Violation 19 5.1.6 Books and Records 19 5.1.7 Business Conducted in Ordinary Course 19 5.1.8 Leases 20 5.1.9 Uses 20 5.1.10 Work Orders 20 5.1.11 Litigation 21 5.1.12 Proprietary Rights 21 5.1.13 Infringement of Proprietary Rights 21 5.1.14 Compliance with Laws 21 5.1.15 Employment Agreements 22 5.1.16 Labour Unions 22 5.1.17 Labour Practices 22 5.1.18 Pension Plans 22 5.1.19 Restrictive Documents 23 5.1.20 Outstanding Long Term Indebtedness 23 5.1.21 Outstanding Guarantees 23 5.1.22 Insurance 23 5.1.23 Taxes 23 5.1.24 Withholdings 24 5.1.25 Condition of Purchased Assets 24 5.1.26 Clients and Supplies 24 5.1.27 Vacation Pay 24 5.1.28 Residence 24 5.1.29 Knowledge 24 5.1.30 Liabilities 25 5.1.31 Inventories 25 5.1.32 Financial Statements 25 5.1.33 Absence of Certain Developments 25 5.1.34 No Material Adverse Change 26 Asset Purchase Agreement Page 2 of 37 5.1.35 Other Agreements 26 5.1.36 Environmental Matters 27 5.1.37 Reliance 28 5.1.38 Evidence 28 5.1.39 Standard of Conduct 28 5.2 Representations and Warranties of the Purchaser 28 5.2.1 Due Incorporation 28 5.2.2 Binding Nature 28 5.2.3 No Violation 28 5.3 Survival 29 5.4 Indemnification of the Purchaser 29 5.5 Warranty Work 29 6 - EMPLOYEES 30 6.1 List of Non-Unionized Employees 30 6.2 Employment to Non-Unionized Employees 30 6.3 Claims by Non-Unionized Employees 30 6.4 Pension Plan for Employees 30 6.5 Assumption of Collective Agreement 31 6.6 List of Unionized Employees 31 6.7 Offers to Unionized Employees 32 6.8 Short Term and Long Term Disability 32 6.9 Benefit Plans 32 7 - MUTUAL COOPERATION 32 7.1 Conduct of Business Prior to Closing 32 (a) Conduct Business in Ordinary Course 32 (b) Continue Insurance 32 (c) Perform Obligations 32 7.2 Access for Investigation Prior to Closing 32 7.3 Actions to Satisfy Closing Conditions 33 7.4 Transfer of Purchased Assets 33 7.5 Assistance in Judicial Claims 33 7.6 Collection of Receivables 34 7.7 Accounts Receivable 34 7.8 Differentiation of Products 34 8 - MISCELLANEOUS 35 8.1 Successors and Assigns 35 8.2 Brokers 35 8.3 Legal Fees 35 8.4 Public Announcement 35 8.5 Entire Agreement 35 8.6 Notices 36 8.7 Time of Essence 36 8.8 Counterparts 36 Asset Purchase Agreement Page 3 of 37 9 – GUARANTEE 36 9.1 Intervention of the Guarantor 36 9.2 Indulgence 37 9.3 Disability of Purchaser 37 Asset Purchase Agreement Page 4 of 37 ASSET PURCHASE AGREEMENT This Asset Purchase Agreement (the “Agreement”) is effective [DATE], BETWEEN: [YOUR COMPANY NAME] (the "Purchaser"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [FIRST PART] (the "Company"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [SECOND PART] (the "Seller”), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WHEREAS the Seller carries on the business of [NUMBER] WHEREAS the Seller has agreed to sell and the Purchaser has agreed to purchase certain assets relating to the Business upon the terms and conditions set forth in this Agreement. NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND AGREEMENTS HEREIN CONTAINED AND OTHER GOOD AND VALUABLE CONSIDERATION, THE [COMPANY NAME] HERETO AGREE AS FOLLOWS: 1. INTERPRETATION 1.1. Definitions Unless the subject matter or context otherwise requires: “Affiliate” has the meaning ascribed to the term “affiliated corporations” in the [COUNTRY BUSINESS CORPORATIONS ACT]. “Associate” has the meaning ascribed to the term “associate” in the [COUNTRY BUSINESS CORPORATIONS ACT]. “Balance of Price” has the meaning ascribed thereto in Section 3.1.2. “Books and Records” means any books and records (originals or copies thereof) of Seller relating exclusively to the Business including, without limitation, books and records relating to the purchase materials and supplies, the manufacture, assembly and processing of products, sales of products, dealings with customers and franchises, invoices, customer lists, mailing lists, suppliers lists, trademarks Asset Purchase Agreement Page 5 of 37 and trade names, financial records, personnel records (to the extent permitted by law) and taxes (excluding Seller’s income tax and other tax records unrelated to the Business). “Business Day” means any day excluding Saturday, Sunday and any other day which in [STATE/PROVINCE], [COUNTRY] is a legal holiday or a day on which financial institutions are authorized by law or by local proclamation to close. “Claims” means any demand, action, cause of action, damage, loss, cost, liability, expense or requirements, governmental or otherwise, including the cost of legal representation in respect thereof and any interest or penalty arising in connection therewith. “Closing” means the completion of the sale to and purchase by the Purchaser of the Purchased Assets under this Agreement by the transfer and delivery of documents of title thereto and the payment of the Purchase Price therefore in accordance with this Agreement. “Closing Date” has the meaning ascribed thereto at Section 4.1. “Collective Agreement” has the meaning ascribed thereto at Section 5.1.15. “Employees” has the meaning ascribed thereto at Section 5.1.15. “Excluded Assets” has the meaning ascribed thereto at Section 2.2. “Goodwill” has the meaning ascribed thereto in Subsection 2.1.12. “Immoveables” has the meaning ascribed thereto in Subsection 2.1.4. “Financial Statements” means: a) the audited financial statements of the Seller relating to its Business for the fiscal periods ended [NUMBER] through [NUMBER] inclusive, consisting of a balance sheet, statements of income and retained earnings, statement of profits and losses, changes in financial position, auditor(s)’ report and notes thereto; and b) the unaudited interim financial statements of the Seller relating to its Business for the interim fiscal period ended [NUMBER], consisting of a balance sheet, statements of income and retained earnings, statement of profits and losses, changes in financial position, auditor(s)’ report and notes thereto; true and exact copies of which are attached as Schedule 1.1a) hereto. “Inventories” means any product held for sale by the Seller and any materials (including components, spare parts, raw materials, work-in-process, finished products, packaging), held by the Seller in connection with the manufacturing, processing, assembly and sale of products, whether or not located on the Seller’s premises, on consignment to a third party or in possession of sub-contractors, in transit or in storage. “Letter of Credit” means the irrevocable letter of credit issued by the [Bank] to the Seller in the amount of [AMOUNT]. Asset Purchase Agreement Page 6 of 37 “Liabilities” means all the liabilities, debts and obligations of the Seller whether present or future, whether pertaining to the Business, the Purchased Assets or otherwise, including, without limiting the generality of the foregoing: i) Liabilities under any service, management or other contract entered into by the Seller; ii) Liabilities under any plans, programs or arrangements of any kind with respect to benefits provided to each person employed by the Seller at the Closing Date; iii) Any Liabilities for any accidents, breach of contract, delict and quasi-delict, occupational health and safety violations, and all other types of claims and lawsuits connected with or arising out of any matter, incident, occurrence of set of facts or circumstances prior to the Closing Date; iv) Liabilities relating to defects of any product sold at any time by the Seller prior to the Closing Date; v) Any Liabilities under [YOUR COUNTRY ACT/LAW/RULE] relating to the protection of the environment, including but not limited to the use, storage, handling, transportation or disposal of any hazardous waste or solid waste (as these terms are defined in [YOUR COUNTRY ACT/LAW/RULE]) vi) or emission, deposit, issuance or discharge of a contaminant (as that term is defined in [YOUR COUNTRY ACT/LAW/RULE) in a greater quantity or concentration than that provided for by regulation of the Government to the extent that any such incident, occurrence or set of facts or circumstances arose prior to the Closing Date; vii) Any Liabilities due to facts or circumstances occurring prior to the Closing Date, constituting any violation of federal, provincial, local or foreign [YOUR COUNTRY LAW], or any regulation of requirement of any governmental body, other than those described in (v); viii) Any Liabilities of the Seller or related to the Purchased Assets for any federal, provincial, local or foreign taxes (including interest and penalties); ix) Any other Liabilities of the Seller not expressly assumed by the Purchaser in this Agreement. “Lien” means any interest in property or the income or profits therefrom securing an obligation owed to, or a claim by, a Person other than the owner (which for the purposes hereof shall include a possessor under a title retention agreement and a lessee under a lease hereinbelow described) of such property, whether such interest is based on common [YOUR COUNTRY LAW], civil [YOUR COUNTRY LAW], statute or contract, and including but not limited to any security interest, hypothec, mortgage, pledge, lien, claim, charge, cession, transfer, assignment, encumbrance, title retention agreement, lessor’s interest under a lease which would be capitalized on a balance sheet of the owner of such property or analogous interest in, of or on any property or the income or profits therefrom of a Person. “Material Adverse Change” means an event, which is materially adverse to the business, assets, liabilities, financial condition or results of operations of the Business [taken as a whole.] Asset Purchase Agreement Page 7 of 37 “Net Worth Adjustment Amount” has the meaning ascribed thereto in Section 3.8. “Proprietary Rights” has the meaning ascribed thereto at Section 2.1.8. “Person or persons” means any individual, company, corporation, partnership, firm, trust, sole proprietorship, government or entity howsoever designated or constituted. “Purchase Price” has the meaning ascribed thereto at Section 3.1. “Purchased Assets” has the meaning ascribed thereto at Section 2.1 “Receivables” means all [accounts receivable], trade accounts receivable, [notes receivable book debts and other debts due] or accruing to the Seller in connection with the Business which have been outstanding from the date of issue for less than [NUMBER] days at the Closing Date, which are not owing to the Seller by any Associate or Affiliate of the Seller, and the full benefit of all securities for such accounts, notes or debts. “Tangible Net Worth” means for the Seller the total (which shall be added to if positive or deducted if negative) of (i) its share capital and (ii) its retained earnings less (iii) any loans or advances to or accommodations made for the benefit of any Affiliate of the Seller and (iv) all its intangible assets. “This Agreement”, the “Agreement”, “hereto”, “hereof”, “herein”, “hereby”, “hereunder” and similar expressions mean or refer to this Agreement as amended from time to time and any indenture, agreement or instrument supplemental or ancillary hereto or in implementation hereof, and the expressions “section”, “subsection” and “clause” followed by a number or letter mean and refer to the specific section, subsection or paragraph of this Agreement. 1.2. Extended Meanings Words importing the singular number include the plural and vice versa and words importing the masculine gender include the feminine and neuter genders. 1.3. Interpretation Not Affected by Headings The division of this Agreement into articles and insertion of headings is for convenience and reference only and shall not affect the construction or interpretation of this Agreement. 1.4. Applicable Law This Agreement shall be deemed to have been made in the Province of [STATE/PROVINCE] and shall be interpreted and enforced in accordance with and be governed by the [YOUR COUNTRY LAW] of [STATE/PROVINCE] and the [YOUR COUNTRY LAW] of [COUNTRY] applicable therein. 1.5. Funds All amounts referred to in this Agreement are in lawful money of [COUNTRY]. 1.6. Financial Documents All calculations and financial documents required to be made or produced under or pursuant to this Agreement shall be made or produced in accordance with generally accepted accounting principles which are from time to time approved by the [COUNTRY] Institute of Chartered Accountants as set forth in the publication known as the “CICA Handbook” and applicable as at the date on which any calculation or financial document is required to be made or produced, save and except as may be specifically defined herein. Asset Purchase Agreement Page 8 of 37 1.7. Invalidity If any provision of this Agreement shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect or render invalid or unenforceable such provision in any other jurisdiction or any other provision of this Agreement in any jurisdiction. 1.8. Business Day In the event that any action to be taken hereunder falls on a day, which is not a Business Day, then such action shall be taken on the next succeeding Business Day. 1.9. Preamble The preamble forms an integral part of this Agreement. 2. PURCHASED ASSETS 2.1. Purchased Assets Subject to the terms and conditions hereof, the Seller agrees to sell, assign, convey and transfer to the Purchaser on the Closing Date and with effect therefrom as a going concern, the undertaking and all of the property and assets of the Business (the “Purchased Assets”), moveable and immoveable, of every kind and description and wheresoever situate, other than the Excluded Assets, said Purchased Assets including, without limiting the generality of the foregoing: 2.1.1.all Inventories as listed in [YOUR ATTACHED SCHEFULE] hereto; 2.1.2.all accounts receivable, trade accounts receivable, notes receivable, book debts and other debts due or accruing due to the Seller; 2.1.3.all machinery, equipment, moulds, dies, tools, small tools and parts including, without limitation: 220.127.116.11. maintenance items, in store materials, handling equipment, accessories and supplies; 18.104.22.168. all machinery, equipment, moulds, dyes and tools listed in [YOUR ATTACHED SCHEDULE] hereto; 22.214.171.124. all machinery, equipment, moulds, dyes and tools in the possession of sub- contractors or other third parties; 126.96.36.199. machinery and equipment which may fall into the category of immoveables by destination including, without limitation, overhead cranes, boilers, compressors, batching plants, mixers, conveyors, electrical control panels, heaters and ventilators. 2.1.4.all immoveables including, without limitation, all land, buildings, plants, leaseholds, improvements and fixtures owned by the Seller, including immoveables for which the Seller has an option to purchase for the Business, the whole as more fully described in [YOUR ATTACHED SCHEDULE] hereto; 2.1.5.all locomotive cranes, lift trucks, cars and other vehicles of all kinds of the Seller used by the Business; Asset Purchase Agreement Page 9 of 37 2.1.6.all data processing equipment and software programs including, without limitation, software programs relating to [NUMBER]; 2.1.7.all furniture, furnishings, fixtures and office equipment; 2.1.8.all trade names, trade marks, trade mark applications, service marks, service mark applications, standard drawings, designs, copyrights, patents, patent applications, know how, trade secrets and other intellectual property rights of the Seller used in connection with the Business including, without limiting the generality of the foregoing, the name [[NUMBER]] (collectively the “Proprietary Rights). 2.1.9.all rights and interest in the name “[NUMBER]“ and the telephone number(s) of the Business; 2.1.10. all licenses and permits of the Business and all licenses and permits required by government or regulatory authorities, to the extent transferable, and all rights of the Business against third parties (including all rights in connection with third party guarantees, warranties and representations); unfilled orders, customer contracts [and outstanding quotations] in connection with the Business listed in [YOUR ATTACHED SCHEDULE]; 2.1.11. all books, records and documentation of the Business, [including the Seller’s [NUMBER] year forecasts, true, complete and exact copies of which are attached in [YOUR ATTACHED SCHEDULE]], customer lists, sales and sales promotional data and advertising material including, without limitation, templates therefore, credit information, cost and pricing information, supplier lists, product catalogues, and other similar data; 2.1.12. the goodwill of the Business, together with the exclusive right to the Purchaser to represent itself as carrying on the Business in continuation of and in succession to the Seller, including the rights and interest in the name “[NUMBER]“ and the telephone number(s) of the Business (the “Goodwill”); 2.1.13. all other property, assets and rights, moveable and immoveable, corporeal or incorporeal, owned by the Seller used or to which it is entitled in connection with the Business. 2.2. Excluded Assets Notwithstanding anything to the contrary contained herein, the [COMPANY NAME] acknowledge and agree that the following property and assets of the Business (the “Excluded Assets”) are excluded from the sale, assignment, conveyance, and transfer by the Seller to the Purchaser herein contemplated: 2.2.1.cash and securities; 2.2.2.all prepaid items including, without limitation, insurance, taxes and other similar items; 2.2.3.all leases of moveable property, conditional sales and agreements, and other agreements where ownership of the property is retained by the Seller thereof; 2.2.4.all leases of land, buildings, plants, leaseholds, improvements and fixtures; 2.2.5.any rights (including indemnification) and claims and recoveries under litigation of Seller against third parties arising out of or relating to events prior to the Closing Date; and 2.2.6.any rights or interests in any employee benefit plan maintained by Seller and any policy of insurance on or relating to Seller’s properties, products or business and all claims or rights thereunder. Asset Purchase Agreement Page 10 of 37 2.3. Leases and Retention of Ownership Agreements Attached as [YOUR ATTACHED SCHEDULE] hereto is a list of all leases of moveable and immoveable property and other agreements used in connection with the Business. The Purchaser may, at any time prior to the Closing Date, require the Seller to provide it with a true, exact and complete copy of any lease listed in [YOUR ATTACHED SCHEDULE] hereto. The Purchaser shall have the right, but not the obligation, to assume all rights, title, interest and obligations of the Seller under any such lease accruing due as of and from the Closing Date. The Purchaser shall give written notice to the Seller as to leases, which it wishes to assume no later than the [NUMBER] Business Day immediately preceding the Closing Date. 2.4. Removal of Purchased Assets The Seller acknowledges that it shall be necessary for the Purchaser to destroy or damage the buildings in which the Purchased Assets are located in order to remove same. The Purchaser shall have no responsibility to repair or replace any buildings so damaged or destroyed. 2.5. Forward Commitments Attached as [YOUR ATTACHED SCHEDULE] hereto are true, exact and complete copies of all forward commitments by the Seller for supplies or materials for the Business. The Purchaser shall have the right, but not the obligation, to the full benefit of all such forward commitments provided that it assumes all obligations of the Seller thereunder accruing due as of and from the Closing Date. The Purchaser shall give written notice to the Seller as to the forward commitments it wishes to assume no later than the [[NUMBER]] Business Day immediately preceding the Closing Date. 2.6. Assets Used in the Business Except as set forth in [YOUR ATTACHED SCHEDULE], there are no assets not included in the Assets which individually or in the aggregate are material to the conduct of the Business as presently conducted. 3. PURCHASE AND SALE 3.1. Purchase Price The purchase price for the Purchased Assets (the “Purchase Price”) shall be [AMOUNT] which shall be paid by the Purchaser to the Seller as follows: ([AMOUNT]) by certified check or bank draft to the order of the Seller on the Closing Date; 3.1.2.[AMOUNT] (the “Balance of Price”) by certified check or bank draft to the order of the Seller on [NUMBER] against surrender by the Seller to the Purchaser of the Letter of Credit. - OR - Payment of Purchase Price. The Purchase Price, [as adjusted pursuant to Section 3.8] shall be paid in accordance with the provisions of articles [NUMBER] (a) and following of the Civil Code of Lower [COUNTRY], in the following manner: 3.1.3.The Purchaser shall pay to the Seller the sum of [AMOUNT] on the Closing Date; Asset Purchase Agreement Page 11 of 37 3.1.4.Subject to Section 5.4, the Purchaser shall pay to the Seller the sum of [AMOUNT], [NUMBER] days following the Closing Date, with interest thereon at the rate of [NUMBER] per annum for the [NUMBER] day period and Purchaser will deliver at Closing to the Seller a Promissory Note in the form attached in Schedule 3.1.2 hereto, as security for the indebtedness; 3.1.5.Subject to Section 3.8, the Purchaser shall pay to the Seller or as the Seller may otherwise direct, the Final Payment Amount with interest therein at the interest rate of [NUMBER] per annum calculated from the Closing Date to the date of payment on the latter of [DATE] or the Business Day next following the date upon which a final determination is made with respect to the calculation of the Final Payment Amount pursuant to Section 3.8. 3.2. Default In the event of any default of payment, then, (i) the obligation of the Seller to make further accommodations hereunder shall immediately terminate; and (ii) at the Seller’s option, the [Outstanding Principal Obligations] and all interest and fees accrued thereon and all other amounts payable under this Agreement shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Purchaser. The foregoing in no way detracts from the Seller’s right and ability at any time to demand the performance of all obligations of the Purchaser to the Seller, notwithstanding that no default has occurred or is continuing. 3.3. Balance of Price The Purchaser may pre-pay the Balance of Price or any portion thereof at any time, without interest or penalty. 3.4. Allocation of the Purchase Price The Purchase Price shall be allocated in the manner set forth in [YOUR ATTACHED SCHEDULE] hereto provided that if the Purchase Price shall be adjusted pursuant to Section 3.7 hereto, the allocation shall be adjusted to agree to the Purchase Price. 3.5. No Assumption of Liabilities The Purchaser shall not assume and shall not be deemed to assume any Liabilities and the Seller undertakes to pay all its obligations and Liabilities as same become due and payable and to indemnify and save harmless the Purchaser shall any claim be made against the Purchaser in connection therewith. In consideration of the Seller’s foregoing undertaking to pay, the Purchaser hereby waives its right to require the Seller to provide it with a bulk sales affidavit conforming to the provisions of [YOUR COUNTRY LAW] (see 4.2.12). The Purchaser’s obligation to indemnify the Seller as aforesaid shall be expressly conditional upon: 1. the Seller giving prompt notice of any threatened or actual claim and/or action to which such indemnity applies and a reasonable opportunity to defend the same in the Seller’s name through counsel of the Purchaser’s own choosing, all at the Purchaser’s own expense and cost; 2. the Seller co-operating with the Purchaser and the Purchaser’s counsel in the defense or any such claim or action, and, Asset Purchase Agreement Page 12 of 37 3. the Seller refraining from settling or compromising or offering to settle or compromise any such claim or action without the Purchaser’s prior written consent. Nevertheless in the event that any creditor of the Seller threatens to have the transaction contemplated by this Agreement set aside by reason of failure to comply with the said bulk sales provisions, the Seller shall immediately, upon receipt of notice of such threat, pay to such creditor the amount claimed by it, irrespective of whether such amount is then due by the Seller to such creditor or whether there is any dispute between the Seller and creditor with respect to such claim. Should the Seller fail to make such payment, as herein provided, the Purchaser may do so, in which event the Seller shall reimburse the Purchaser the amount so paid by the Purchaser, within [NUMBER] Business Days of Purchaser’s written demand to the Seller therefore. 3.6. Payment of Taxes The Purchaser shall be liable for and shall pay all land transfer taxes, federal taxes, goods and services tax, and provincial sales taxes, excise taxes and all other taxes, duties or other like charges properly payable upon and in connection with the conveyance and transfer of the Purchased Assets by the Seller to the Purchaser, provided that the Seller shall do or shall cause to be done such things as are reasonably requested to enable the Purchaser to comply with such obligations in an efficient manner. 3.7. Adjustments All adjustments shall be made as of the Closing Date, notably with respect to hypothec payments, real estate taxes, insurance, heating, operating and other like items. 3.8. Net Worth Adjustment The Purchase Price has been agreed to by the Purchaser on the basis of the representation of the Seller that the Tangible Net Worth of the Inventories at the Closing Date shall not be less than [AMOUNT]. Should the Tangible Net Worth as determined from the Financial Statements (as agreed upon or determined by arbitration award) not equal at least [AMOUNT] the Purchase Price shall be reduced by [AMOUNT] by which the Tangible Net Worth is below [AMOUNT] (the “Net Worth Adjustment Amount”). The Seller shall pay the Purchaser the Net Worth Adjustment Amount on the [NUMBER] day following the acceptance or deemed acceptance of the Financial Statements, or, as the case may be, the rendering of the arbitration award in connection therewith. 3.9. Disagreement Regarding Adjustment of Purchase Price If Purchaser and Seller are unable to resolve any disagreement between them regarding the Adjustment to Purchase Price within [NUMBER] days after the giving of notice of such disagreement, the items in dispute will be referred to determination to an independent accountant as may be agreed to by Purchaser and Seller (the “Accountants”), which firm does not perform material services for Purchaser and Seller or any of their respective Affiliates, as promptly as practicable. 3.10. Escrow of Purchase Price Escrow of Purchase Price pending registration of Deed of Sale, radiation of liens and charges on Purchased Assets and full and final payment of all liabilities. Asset Purchase Agreement Page 13 of 37 4. CLOSINGS AND CONDITIONS PRECEDENT TO THE SALE 4.1. Closing Date The purchase herein contemplated shall take place at the offices of [INDIVIDUAL NAME], [FULL ADDRESS], [STATE/PROVINCE] at [HOUR] hours (the “Time of Closing”) on [NUMBER] or such other Business Day as is agreed to by the [COMPANY NAME] in writing. A pre-closing shall take place at the same location [NUMBER] Business Day prior thereto. 4.2. Conditions Precedent to Closing in Favor of the Purchaser The obligation of the Purchaser to purchase the Purchased Assets and to perform its obligations hereunder are subject to the fulfillment of the following conditions precedent to its satisfaction on or before the Closing Date, it being understood that the said conditions are included for the exclusive benefit of the Purchaser and may be waived, in writing by the Purchaser, either in whole or in part at any time: 4.2.1.Corporate Authorization The Purchaser shall have received from the Seller a certified copy of the certificate and articles of incorporation of the Seller and any certificate and articles of amendment issued to the Seller, a certified copy of a resolution of the board of directors and of the Shareholders of the Seller authorizing the execution and delivery of this Agreement and approving the sale of the Purchased Assets to the Purchaser, an incumbency certificate listing all of the officers and the directors of the Seller who sign any documents in connection with this Agreement, and authorizing the issuance of the certificates and other documents required to be issued by the Seller hereunder, and Deed of Sale for the land, building and plant of the Seller. 4.2.2.Statements The delivery of Financial Statements of the Seller relating to the Business, for the period ended the month immediately preceding the Closing Date certified by the chief financial officer of the Business to be true and correct in all material respects and to have been prepared in accordance with generally accepted accounting principles consistently applied. 4.2.3.Truth of Representations and Warranties The representations and warranties of the Seller to the Purchaser contained in this Agreement and the Schedules thereto shall be true, correct and complete in every detail at the Time of Closing on the Closing Date with the same force and effect as if such representations and warranties were made at and as of such time with respect to the state of facts then existing and the Seller shall deliver to the Purchaser the solemn declaration of its President to such effect; provided that the closing of the transaction of purchase and sale herein provided for shall not be nor be deemed to be a waiver of the representations and warranties contained in this Agreement and Schedules, which representations and warranties shall continue in full force and effect for the benefit of the Purchaser. 4.2.4.Compliance with Terms and Conditions All the terms, covenants and conditions of this Agreement to be complied with or performed by the Seller on or before the Time of Closing on the Closing Date shall have been complied with or performed. Asset Purchase Agreement Page 14 of 37 4.2.5.Government Approvals There shall have been obtained from all appropriate federal, provincial, municipal or other governmental or administrative bodies such approvals or consents as are required to permit the change of ownership of the Purchased Assets contemplated hereby, including, without limiting the generality of the foregoing, such certificates as the Purchaser’s counsel considers desirable pursuant to the Competition [YOUR COUNTRY ACT/LAW/RULE] and the Investment [YOUR COUNTRY ACT/LAW/RULE]. 4.2.6.Approval of Purchaser’s Counsel All actions, proceedings, instruments and documents required to implement this Agreement, or instrumental thereto, and all other legal matters relating to the purchase of the Purchased Assets, including title of the Seller to the Purchased Assets, shall have been approved as to form and legality by counsel for the Purchaser, [INDIVIDUAL NAME]. 4.2.7.Prohibited Actions No action or proceeding at law or in equity, shall be pending or threatened by any person, firm, company, government, governmental authority, regulatory body or agency to enjoin, restrict or prohibit: i) the purchase and sale of the Purchased Assets contemplated hereby, or ii) the right of the Purchaser to conduct the Business. 4.2.8.Delivery of Documents and Title Deeds The Seller shall have delivered to the Purchaser all documents or copies thereof required to be delivered, all title documents, deeds, leases, contracts and agreements and other documents in its possession or under its control relating to any of the Purchased Assets or the Business, including all Books and Records, which documents, Books and Records shall become the property of the Purchaser. 4.2.9.Legal Opinion of Seller’s Counsel The Purchaser and its counsel, [INDIVIDUAL NAME], shall have received a legal opinion of [INDIVIDUAL NAME]. [NUMBER], counsel to the Seller, substantially in the form [YOUR ATTACHED SCHEDULE] hereto. 4.2.10. Non-Competition Agreements The Seller and each Affiliate of the Seller shall enter into a non-competition agreement in the form of [YOUR ATTACHED SCHEDULE] hereof providing for non-solicitation and non-competition covenants with respect to [SPECIFY], for a term of [NUMBER] years from the Closing Date within [YOUR COUNTRY], [STATE/PROVINCE]. 4.2.11. Residence The Seller shall have furnished the Purchaser with evidence in the form of a statutory declaration of a duly authorized officer of the Seller, that the Seller is a resident of [COUNTRY] within the meaning of the Income Tax Act [COUNTRY]. Asset Purchase Agreement Page 15 of 37 4.2.12. Bulk Sale Affidavit The Seller shall have executed and delivered to the Purchaser a bulk sale affidavit containing the names and addresses of all creditors of the Seller and the amounts due or to become due to each such creditor and the origin of each such claim, in the form of [YOUR ATTACHED SCHEDULE] hereto, the whole in conformity with articles [NUMBER] and following [YOUR COUNTRY LAW]. 4.2.13. Election Form The Seller and Purchaser shall each execute tax form [PLEASE SPECIFY YOUR COUNTRY’S TAX FORM NUMBER(S)] with respect to the sale of the debts receivable as contemplated by [YOUR COUNTRY ACT] and [YOUR STATE/PROVINCE ACT]. 4.2.14. Powers of Attorney The Seller shall deliver by hand to the Purchaser not less than [NUMBER] days prior to the Closing Date a list showing the name of each person, firm or corporation or business organization holding a general or special power of attorney from the Seller and a summary of the terms thereof. 4.2.15. Consents All consents of third parties necessary to permit the transfer and assignment of any of the Purchased Assets shall have been obtained. 4.2.16. Due Diligence The Purchaser and its legal counsel shall have conducted a due diligence review of the Business, including its books and records, which shall be satisfactory to the Purchaser in all respects. 4.2.17. No Substantial Damage or Adverse Change Subject to section 4.4, no substantial damage to the Assets shall have occurred prior to the Closing Date and no adverse material change in Purchased Assets or the financial condition or prospects of the Business shall, in the reasonable opinion of the Purchaser, have occurred prior to the Closing Date. 4.2.18. No Adverse Legislation No legislation (whether by statute, regulation, by-law or otherwise) shall have been enacted or introduced which, in the reasonable opinion of the Purchaser, adversely affects or may adversely affect the Purchased Assets or Business. 4.2.19. Delivery of Documents The Seller shall execute and deliver to the Purchaser all such bills of sale, assignments, instruments of transfer, assurances, consents and other documents as shall be necessary effectively to transfer to Purchaser all Seller’s rights, title and interest in, to and under, or in respect of, the Purchased Assets, and shall deliver up to Purchaser possession of the Purchased Assets, free and clear of any liens, charges or encumbrances or rights of third Persons; and shall effect such registrations, recordings and filings with public authorities as may be required in connection with the transfer of ownership to Purchaser of the Purchased Assets. Asset Purchase Agreement Page 16 of 37 4.3. Conditions Precedent to Closing in Favor of the Seller The purchase and sale of the Purchased Assets is subject to the satisfaction on or before the Time of Closing on the Closing Date, of the following terms and conditions which are included herein for the exclusive benefit of the Seller and which may be waived in whole or in part, only by the Seller: 4.3.1.Letter of Credit The delivery to the Seller of the Letter of Credit. 4.3.2.Truth of Representations and Warranties. The representations and warranties of the Purchaser to the Seller contained in this Agreement and Schedules hereto shall be true, correct and complete in every detail at the Time of Closing on the Closing Date with the same force and effect as if such representations and warranties were made at and as of such time and the Purchaser shall deliver to the Seller the solemn declaration of its President to such effect; provided that the closing of the transaction of purchase and sale herein provided for shall not be contained in this Agreement and Schedules, which representations and warranties shall continue in full force and effect for the benefit of the Seller as provided in Article [NUMBER]. 4.3.3.Compliance with Terms and Conditions All of the terms, covenants and conditions of this Agreement to be complied with or performed by the Purchaser at or before the Time of Closing on the Closing Date shall have been complied with or performed. 4.3.4.Legal Opinion of Purchaser’s Counsel The Seller and its counsel shall have received a legal opinion of counsel to the Purchaser, substantially in the form [YOUR ATTACHED SCHEDULE] hereto. 4.4. Risk of Loss If prior to the Closing Date any part of the Purchased Assets shall be destroyed or damaged by any cause whatsoever, including fortuitous events, or shall be expropriated or seized by governmental authority, the Purchaser and the Seller shall enter into negotiations to determine the amount by which the Purchase Price shall be reduced to compensate for such loss or damage. Negotiations shall continue for a period of [NUMBER] days. If the [COMPANY NAME] have not reached agreement on the amount by which the Purchase Price shall be reduced within such period, the Seller shall give the Purchaser within a further period of [NUMBER] days, a written notice stipulating the amount by which the Seller considers the Purchase Price should be reduced. The Purchaser shall have a period of [NUMBER] days from the giving of the Seller’s notice, to give written notice to the Seller of its acceptance or refusal of the amount of the reduction in the Purchase Price. Should the Purchaser accept the amount of the reduction, it shall proceed to purchase the Purchased Assets for the agreed upon reduced Purchase Price and upon the other terms and conditions herein, save and except that the Closing Date shall be extended by a period equal to the period of the delay to reach agreement on the reduced Purchase Price. Should the Purchaser refuse the amount of the reduction or not give written notice within the required delay, this Agreement shall be null and void and of no further effect and neither party shall have any recourse against the other. Asset Purchase Agreement Page 17 of 37 4.5. Notification If the Purchaser becomes aware that any of the foregoing conditions are not likely to be fulfilled at or before the Closing Date, it shall so notify the Seller with a view to permitting it to take such action as may be necessary to enable it to cause such conditions to be fulfilled at or before the Closing Date. In case any of the foregoing conditions shall not be fulfilled on or before the Closing Date to the reasonable satisfaction of the Purchaser, the Purchaser may rescind this Agreement by notice to the Seller and in such event the Purchaser shall be released from all obligations hereunder and, unless the condition for the non-performance of which the Purchaser has rescinded this agreement are reasonably capable of being performed or caused to be performed by the Seller, the Seller shall also be released from all obligations hereunder; provided that any such conditions, to the extent that it is for the benefit of the Purchaser, may be waived in whole or in part by the Purchaser without prejudice to its rights of rescission in the event of the non-fulfillment of any other condition or conditions, any such waiver to be binding on the Purchaser only if the same is in writing. 5. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE PURCHASER 5.1. Representations and Warranties of Seller The Seller hereby represents and warrants to the Purchaser and acknowledges and confirms that the Purchaser is relying upon such representations and warranties in connection with the purchase by the Purchaser of the Purchased Assets: 5.1.1.Due Incorporation and Qualification to Carry on Business The Seller is a corporation duly incorporated and organized and is validly subsisting under the [YOUR COUNTRY LAW] of [COUNTRY]. The Seller has all necessary right, power and authority to enter into, execute and deliver this Agreement and to perform its obligations hereunder. The entry into, execution and delivery of this Agreement and the performance by the Seller of its obligations hereunder have been duly authorized and approved by all necessary corporate action of the board of directors of the Seller. The Seller has the corporate power to own its property and to carry on the Business as now being conducted by it. The Seller is duly qualified (and has all required permits, licenses, certificates and authorizations necessary) to transact and carry on the Business in the manner and to the extent currently carried on in all jurisdictions in which it presently carries on business and is so duly licensed or qualified in each jurisdiction whereby by virtue of the nature of the Business, such licensing and qualification is necessary except for such failures to be so qualified or licensed, if any, which, in the aggregate, would not have a Material Adverse Effect. The only jurisdictions in which the Seller carries on business or owns or leases property are set forth in Schedule 5.1.1 hereto. 5.1.2.Binding Nature This Agreement constitutes a legal, valid and binding obligation of the Seller enforceable in accordance with its terms. 5.1.3.Title of Assets The Purchased Assets are owned by the Seller by good and marketable title thereto, free and clear of all Liens or of any rights or privileges capable of becoming Liens, except statutory liens, if any, none of which prevent in any material way the use of any of the Purchased Assets. The Seller represents and warrants to the Purchaser that, to the best of its knowledge, there are no such Liens. The Seller further undertakes, at its sole cost and expense, to free all of the Purchased Assets of all such Liens within a period of [NUMBER] days of becoming aware thereof. Asset Purchase Agreement Page 18 of 37 The Immoveables have reasonable access to public roads and to all utilities, including electricity, sanitary sewer, potable water, natural gas or its equivalent. All Immoveables and all improvements thereon conform in all material respects with all material zoning, environmental and other land use [YOUR COUNTRY LAW], occupational health and safety [YOUR COUNTRY LAW], ordinances, rules and regulations and other requirements of law and such improvements do not encroach in any respect on property of others. All material occupancy and other certificates or permits for the occupancy and lawful use of the Immoveables and the improvements thereto have been issued and are presently in full force and effect. All notices of violations issued by any governmental instrumentality having jurisdiction against or affecting any of the Immoveables and improvements have been materially complied with. No use of any Immoveables and improvements is dependent upon the continuance of a non-conforming use or a special permit or license. No condemnation or taking by public authority of any Immoveables owned by the Seller is pending or, to the best of the Seller’s knowledge, threatened. The Seller owns no assets reflected in the Financial Statements that have been disposed of since the date thereof, other than those which have been sold or otherwise disposed of in the ordinary and normal course of the routine daily affairs of business. 5.1.4.Options, Commitments No person, firm or corporation has any written or oral agreement, option, understanding or commitment, or any right or privilege capable of becoming an agreement, for the purchase from the Seller of any of the Purchased Assets, other than: i) the Purchaser pursuant to this Agreement; and ii) customers pursuant to purchase orders accepted by the Seller in the ordinary course of the Business. 5.1.5.No Violation The entering into of this Agreement and the transactions contemplated hereby will not result in the violation of, or default under, any of the terms and provisions of the constating documents or by- laws of the Seller or of any resolutions of the directors or shareholders of the Seller or of any indenture or other agreement, written or oral, to which the Seller may be a party or by which it is bound or in the creation of any lien or other encumbrance on any of the Purchased Assets. 5.1.6.Books and Records All accounts, books and records of the Seller kept in connection with the Business fairly and correctly set out and disclosed, in all material respects, in accordance with generally accepted accounting principles, the financial position of the Business as at the date hereof and all material financial transactions of the Seller relating to the Business have been accurately recorded in such books and records. 5.1.7.Business Conducted in Ordinary Course The Business has been carried on in the ordinary and normal course and will be carried on in the ordinary and normal course after the date hereof and up to the Closing Date, [except that the Seller shall not, after the date hereof issue quotations to, negotiate with or accept orders from any person in connection with the supply by the Seller to such person of any products manufactured or processed by the Business] and that the Seller shall use its best efforts to minimize the Inventories to be purchased by the Purchaser. The Seller undertakes that, after the date hereof, it shall refer all such persons as well as all inquiries with respect to products manufactured or processed by the Business to the Purchaser. Asset Purchase Agreement Page 19 of 37 Seller will use commercially reasonable efforts to i) preserve intact the present organization and reputation of the Business, ii) keep avai
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